From Island to Mainland:Bringing ERP Onshore
April 1, 2009
When Rob Raeke read a recent news story about a disgruntled tech worker who allegedly took over the San Francisco government’s fiber optic network by locking out administrators and refusing to turn over the passwords, his immediate reaction was, “Wow. That sounds familiar.” That’s because Raeke, as controller of American Inks and Coatings, had survived an IT hostage crisis of his own, though not without the help of the company’s Enterprise Resource Planning (ERP) software provider.
Stranded by CustomizationWith 170 employees at seven locations, including a home office in Sheridan, AR, American Inks and Coatings is a major manufacturer of high-volume inks and coatings for the commercial packaging industry. According to Michael Mosley, chief operating officer, the company had operated for three years at the mercy of a remote IT department in Allentown, PA – nearly 1,200 miles from the home office. Mosley says the “IT island” was located in Allentown for two reasons: (1) It was convenient, at one time, when the company had a plant in the greater Philadelphia region, and (2) the Allentown area provided enough bandwidth to run the company’s three customized software systems, which required 18 servers.
“We couldn’t economically get that kind of bandwidth down here [in rural Arkansas],” Mosley says. “Instead, we had a separate IT department in a remote IT office with the equivalent of eight TI lines running in and eight TI lines running out. It was very expensive, and only one person knew how to make our systems work.”
That one person, the IT project manager, spent most of his time fixing the one problem that repeatedly threatened to bring business to a screeching halt – suspended batches. Raeke uses this term, as well as “batch hang-ups,” to describe what happened when communication breakdowns between software systems prevented inventory transactions from being processed. The end result was that American Inks and Coatings had to wait for the IT project manager to research, fix and release each suspended batch before issuing invoices, shipping sales orders and updating accounting. This process was especially complicated because the company used five servers to process inventory transactions and sometimes experienced up to 60 suspended batches in a week. If they piled up at the wrong time, it could take the company up to a week to close physical inventory.
“Had our IT project manager ever been hospitalized for even a week, our entire computer process would have stopped,” Raeke says. “Without him there to release suspended batches, we would have been back to notepads, pencils and calculators.”
Other members of the remote IT staff included a programmer, a hardware specialist and a help-desk staffer. The programmer’s primary responsibility was to manage software interfaces and updates for the company’s three customized software systems. But Raeke says this job was “nearly impossible” because the inter-system customizations were so complex.
“There was no way for us to get to the latest and greatest versions of our systems,” Raeke says. “We needed three full-time IT guys just to keep our current systems running. It was just too complicated.”
After five years spent struggling – and paying – to establish and maintain communication between software systems, American Inks and Coatings started searching for a better way to manage its business processes. Among the company’s most viable options was purchasing a fully integrated ERP solution.
A Lifeboat to the MainlandUpon researching the major players in the ERP industry, including SAP, Microsoft Dynamics, Chempax and Sage’s MAS product line, Mosley and Raeke found they all required the same patchwork approach as the company’s customized software setup.
“We were very reluctant to go down that road again,” Raeke says. “We weren’t looking to cobble together best-of-breed systems. We were looking for a different breed altogether – software capable of handling our entire operation in one system. We eventually found DEACOM.”
The DEACOM Integrated Accounting and ERP Software System is designed to manage the business processes of a batch manufacturer – formulation, regulatory reporting, inventory control, lot tracking, sales order entry, accounting, purchasing, production and labor collection – in a single system. As an integrated system, it provides manufacturers with one point of data access and control, which in the case of American Inks and Coatings eliminates problems like suspended batches and other issues associated with the miscommunication of information between multiple systems. Combine single-spot data control with a consistent look and feel across all departments and only one vendor source for software updates, and the DEACOM System answered the company’s call for an ERP system that could relieve its IT dependence.
Deacom also offered the best financial deal: a fixed price for data conversion, implementation, training, technical support and the system itself. “Software companies typically sell you their canned package and then nickel-and-dime you for everything else,” Raeke says. “It’s like a typical government bridge project. They say it’s going to cost $20 million to build a bridge, and then before you know it, you’re driving across a $40 million bridge. Deacom takes a different approach by offering a turnkey price for a fully integrated solution. That was a big selling point.”
Another big selling point was Deacom’s approach to technical support and system development, and how the two efforts come together at Deacom’s annual user conference. “We think it’s fantastic that Deacom invites users to get together in a big room once a year, where they can either praise or complain about the software, talk about issues and share experiences,” Raeke says. “Ultimately, the Deacom staff takes that feedback and uses it to improve the system. It’s a good mutual relationship.”
But the biggest selling point of all, Mosley says, was Deacom’s willingness and ability to conduct a speedy, IT-free implementation. “Our IT guys clammed up when we signed for a new system. We had 15 different databases for our software alone and absolutely no help getting anything out of them. We had to start from scratch, but Deacom figured it out and had us up and running in seven weeks. “It easily could have been a six-month or year-long project, but Deacom knows its product and was willing to jump on board and do it when we were in a pinch. That said a lot about their integrity.”
Savings With a Simplified SystemSince going live on the DEACOM System, American Inks and Coatings has greatly simplified its hardware environment and reduced its IT dependence. At the outset, the number of TI lines dropped from “eight in, eight out” to two, and the total number of servers was cut by 22. In addition, Raeke and Toby Sites, the company’s Environmental, Health and Safety Manager, are able to manage the functions of the former full-time IT staff as a side function of their regular jobs without incurring additional overtime. The system’s so simple now, our new IT manager, Darrell Kelly, can solve problems with basic knowledge of DEACOM and the SQL Server® database.”
But Raeke, Sites and Kelly haven’t had many calls for help. So far, they have been able to address issues on their own, primarily because the system’s user security controls enable them to track every move made by each user.
“We can look at the history and identify the problem very quickly,” Sites says. “The system shows who did what and when they did it. The information is very accessible, and that makes it very easy to learn and teach.”
Add it all up – the reduction of systems, servers and TI lines, the elimination of the remote IT office and the burdensome restrictions of suspended batches and outdated software, and the simplification of business processes – and you have the most valuable ROI point of all: In one year, the DEACOM System paid for itself in savings.
“We did some studies on savings, and it’s a lot of money,” Mosley says. “One year of savings more than paid for the software. Deacom essentially eliminated our major issues at no cost. Now our only job is the one we’re here to do – being innovative in the products we put out, being competitive in price and serving our customers well.”
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